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Monday, August 22, 2011

Sri Lanka Hilton reveals Rs10.3bn accumulated losses

Aug 22, 2011 (LBO) - Sri Lanka's Colombo Hilton hotel has filed its first accounts in about 20 years, revealing a loss of 1.2 billion rupees in 2010 and accumulated losses of 10.3 billion rupees and auditors expressing a qualified opinion.

Hotel Developers (Lanka) which owns Hilton Colombo Hotel said the loss in the financial year to March 31, 2010 was up 3.9 percent from the previous year with sales up 30 percent to 1.8 billion rupees.

Finance costs had risen to 1.4 billion in 2010 from 1.2 billion rupees the previous year while shareholder funds were a negative 4.8 billion rupees, down from 8.3 billion the year before after a property revaluation.

The hotel, in which the government holds a 65 percent controlling interest and whose management agreement with Hilton International USA expired in December 2007, reported a loss per share of 26.87 rupees in 2010 compared with 25.87 the year before.

Hotel Developers (Lanka) shares were trading at 140 rupees in mid-day trade Monday, down 3.70 rupees.

The Hilton Colombo accounts filed with the Colombo stock exchange said that although the management deal had expired, management fees have been accounted as per the terms of the agreement.

Auditors SJMS Associates have given a qualified opinion on the Hilton Colombo's accounts saying the company’s accumulated losses have eroded its stated capital.

Hilton Colombo said in the stock exchange filing its directors believe the company will be able to continue its operations for the foreseeable future as a going concern and that the government has opposed winding up action in the District Court of Colombo.

The government can convert an outstanding loan of 10.2 billion rupees into equity at any time which can prevent erosion of the stated capital, nor has the government made any claim on the loan, it said.

Auditors SJMS Associates said they had not got declarations from key management personnel with regard to directors' emoluments and their interests in contracts with the company.

They said they were also unable to determine the existence and value of property, plant and equipment owing to a legal dispute in respect of lease of land on which Hilton Colombo is built and because there has not been a physical verification.

source - www.lbo.lk